What
taxes do investors in Romania pay for a micro enterprise created in Romania ?

In 2019, Romanian micro-enterprises pay
income tax, according to Title III of the Fiscal Code. The tax rate is 1% for
micro-enterprises with at least one employee and 3% for those that do not have
employees. Company creation in Romania becomes interesting from a tax point of
view.

With this measure the Romanian governament
wants to stimulate the investmens in Romania and accelerate company creation in
Romanoa.

In 2019, as a micro enterprise, a Romanian
legal person fulfilling cumulatively the following conditions on 31 December
2018:

·The company has achieved
revenues that did not exceed the equivalent in lei of 1,000,000 euros. The
exchange rate for determining the euro equivalent is the one applicable at the
end of the financial year in which the revenue was recorded;

·The share capital is held
by persons other than the state and the administrative-territorial units;

·The company is not in
dissolution, followed by liquidation, registered in the trade register or in
the courts, according to the law.

The exchange rate used is 4.6639 for one
euro. This means that the ceiling for the tax on the income of the
micro-enterprise is of 4,663,900 lei, income realized in 2018.

What
is the income of the micro-enterprise?

The taxable base is the income from any
source, less the following:

·Product revenue costs;

·Income related to the
costs of services in progress;

·Income from the
production of tangible and intangible assets;

·Subsidy income;

·Income from provisions,
impairment adjustments or loss of value, which were non-deductible expenses for
the calculation of taxable profit or were established during the period when
the Romanian legal person was subject to the tax on the income of the
micro-enterprises;

·Income arising from the
repayment or cancellation of interest and / or late payment penalties, which
were non-deductible expenses when calculating taxable profit;

·Income from indemnities,
from insurance / reinsurance companies, for the damages caused to the goods of
the nature of the stocks or of the own tangible assets;

·Income from exchange rate
fluctuations;

·Financial incomes related
to debts and debts subject to a currency exchange rate resulting from their
valuation or settlement;

·The amount of trade
discounts granted after invoicing, registered in account "709",
according to the applicable accounting regulations;

·Income from payment
titles obtained by entitled persons, according to the law, initial titles of
the Central Compensation Commission or their legal heirs;

·Damages received on the
basis of the judgments of the European Court of Human Rights;

·Incomes obtained from a
foreign state with which Romania has concluded a convention for the avoidance
of double taxation, if they were taxed in the foreign state.

Exception

Micro businesses can opt for 16% corporate
tax if they have subscribed a minimum share capital of 45,000 lei and have at
least 2 employees. They can opt once to apply corporate tax, starting with the
quarter in which these conditions are met cumulatively, the option being final.
If these conditions are not met, the company applies the tax on micro
enterprise income from the fiscal year following that in which the share
capital is reduced to less than 45,000 lei and / or the number of employees
falls below 2.

If, during the period in which the legal
entity applying the income tax, the number of employees varies in the course of
the year, downwards to 2, the condition must be re-completed within 60 days, which
is extended also in the next fiscal year . The exit from the taxation system on
the income of micro-enterprises as a result of the option is communicated to
the competent tax authorities, according to the provisions of the Fiscal
Procedure Code. The calculation and payment of tax on profits by
microenterprises that opt ​​to apply corporate tax is made taking into account
the revenues and expenses incurred since that quarter.

Thus, for companies that have not made
profits and have made large investments, it is more convenient to pass the 16%
profit tax.